September 26, 2012

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Article

Trucking Increases Reflect Economic Growth

Di Lewis

September 26, 2012


The trucking industry is showing some signs of growth, according to the Fall Trucking Report from TAB Bank.

Sales volume, average invoice and monthly tonnages have all shown recent increases, as well as growth year over year, the TAB report states.

These are generally good signs for the economy as a whole, said Trevor Morris, TAB Bank marketing manager. “The trucking industry is a great barometer or leading indicator of economic wellbeing, whether positive or negative,” Morris said.

Because the trucking industry transports goods and materials, an increase in tonnage and other metrics, usually means demand for those goods and materials is also up, he said.

Despite gain in other areas, diesel prices are more than $4 a gallon again, after dipping in the summer. While prices higher than $4 used to be a big psychological barriers for trucking companies, Eric Myers, TAB VP of marketing, said companies have seen prices go up so many times that it’s not as much of a problem psychologically.

Instead where the increase in fuel cost hits hardest is with “the small guy, the one-off trucker,” Myers said. Larger companies typically have a fuel surcharge in contracts to offset any increase, but smaller or independent truckers don’t. “That’s where it really beats up those guys. They can’t change their rates from one week to the next,” he said.

The fuel surcharges are also partially behind the increase in average invoice, Myers said.

The increase in tonnage is expected as a normal pre-holiday bump, Morris said, but it’s still too early to tell what it means for the end-of-the-year numbers.

Myers said tonnage has already come back to pre-recession levels, but fewer fleets are handling those loads. He said the recession pushed a lot of companies out of business. Because there’s a low barrier to entry for trucking, there is a cyclical movement within the industry of boom and bust.

The bank’s index of “Core 25” clients reached 119.7 million tons of freight in July. Additionally a survey of those clients saw most companies anticipating hiring or staying the same in the next two months. The same survey showed no clients anticipating a decrease in freight rates, while about one-third thought rates would increase.

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